Dissonance between formal and informal housing capital: The case of Korea

Abstract

This study develops a new way to analyze the evolving dynamics of wealth concentration in the Global South, where indigenous norms and institutions play a crucial role in accumulating wealth. The study particularly focuses on the unique development of the Korean housing finance system: its development path can be characterized as the history of challenges, which refer to forces that have hindered the accumulation of wealth, and responses, which refer to counteractions that seek alternative modes of wealth accumulation. On the basis of such structural dissonance, this study situates how the reconstitution of housing capital discriminatorily reconstructs households’ resilience against economic and social insecurity to maintain and/or pursue homeownership. These findings explicitly contradict contemporary theories of financial intermediation that financial market reform that accompanies new products and services, lower interest rates, and greater liquidity substantially motivates households to purchase real estate. Rather, financial globalization increases inequalities in wealth that are set in motion through the tension between formal and informal housing capital by creating junctions that transfer risk and uncertainty in the financial market onto individuals.